Follow Us on:

Kenya obtains syndicated loan of $750 million to pay off creditors previous loan

With public debt standing at a record high of Sh4.58 trillion as at November 2017, Kenya has obtained a $750 million syndicated loan for seven years from the Trade Development Bank (TDB) to pay off its creditors.

Despite its creditors extending its earlier two-year syndicated loan last year, the East African country’s debt is the highest public debt ever recorded compared to its neighboring countries in the region.

Global credit rating firm, Moody has placed the country’s B1 long-term issuer rating on review for downgrade due to its increasing debt. This has been attributed to a mixture of negative micro-economics, including high debt burden, government liquidity pressure, the tense political situation and uncertainties over the future direction of Kenya’s fiscal policy.

Report is that the Kenyan governments plans to capitalize on the rising demand for new issues by issuing a $1.5 billion Eurobond for a decade starting at the beginning of March this year.

According to Henry Rotich, the country’s finance minister, as at last November, 90 percent of investors have approved a six-month extension of the syndicated facility, as potential funds raised from a new Eurobond issue can be used to pay off unpaid debt.

However, there has been no official confirmation from the country’s ministry of finance, as well as a response from TDB regarding the loan.

Government Debt to GDP in Kenya averaged 53.74 percent from 1998 until 2016, reaching an all-time high of 78.30 percent in 2000 and a record low of 38.20 percent in 2012. Kenya recorded a government debt equivalent to 55.20 percent of the country’s Gross Domestic Product in 2016.

The Nerve Africa is an Africa focused growth information and digital news service that produces multi-perspective, simplified, engaging and high quality reportage on the new economy for smart African professionals and a global community interested in Africa.